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China to spend 100 Billion Yuan on jet engine Development

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By David Lague and Charlie Zhu HONG KONG | Tue Oct 30, 2012 6:05am EDT (Reuters) - China has designed nuclear missiles and blasted astronauts into space, but one vital technology remains out of reach. Despite
decades of research and development, China has so far failed to build a reliable, high performance jet engine. This may be about to change. China's aviation sector is striving for a
breakthrough that would end its dependence on Russian and Western
power plants for military and commercial aircraft. Beijing is evaluating a 100 billion yuan plan to galvanize a disjointed and under-funded engine research effort, aviation industry officials say.
The giant, state-owned Aviation Industry Corporation of China AVIC.L,
China's dominant military and commercial aviation contractor, has
been lobbying hard for the extra money, officials familiar with the
details say. AVIC, with more than 400,000 employees and 200 subsidiaries
including 20 listed companies, has already set aside about 10 billion yuan of its own funds for jet engine development over the next three years. The engine financing plan is under high-level discussion in Beijing, said
Zhao Yuxing, an official at the securities office of Shanghai-listed Xi'an
Aero-Engine Plc (600893.SS), a key military engine-making unit of AVIC. "What we know is our company has been included in the
strategic programme, which is designed to greatly develop and
support the engine industry," he said by phone from his company's
headquarters in the northwestern city of Xi'an. China's military industry as a whole has suffered from Tiananmen-era
bans on the sale of military equipment from the United States and
Europe. Moreover, foreign engine-makers have been loath to transfer
technology. That has prevented China from taking its usual route to
closing a technology gap: copying it. Some Chinese aviation industry specialists forecast that Beijing will
eventually spend up to 300 billion yuan on jet engine development
over the next two decades. "China's aircraft engines have obviously been under-invested," said
Wang Tianyi, a defence sector analyst with Shanghai's Orient Securities.
"One hundred billion yuan is not a huge amount of money in the
engine world." JEALOUSLY GUARDED SECRETS While AVIC's long term priority is to develop high performance engines
for military aircraft, it is also trying to design power plants for
passenger aircraft in the world's fastest growing civil aviation market.
Based on projected demand from Western aircraft manufacturers,
engines for new passenger aircraft delivered in China could be worth
more than $100 billion over the next 20 years. "Historically, all major players in aerospace have possessed both
airframe and engine design capabilities," said Carlo Kopp, the
Melbourne, Australia-based founder of Air Power Australia, an independent military aviation think tank. "Until China can design and
produce competitive engines, the performance and capabilities of
Chinese aircraft designs will be seriously limited by what technology
they are permitted to import." For China's aviation engineers, the traditional short cuts of extracting
intellectual property from foreign joint venture partners or simply
copying technology from abroad have so far delivered minimal results. Foreign engine manufacturers including General Electric (GE.N), Snecma, a subsidiary of French aerospace group Safran (SAF.PA), Rolls Royce Plc (RR.L) and Pratt & Whitney - a unit of United Technology Corp (UTX.N), jealously guard their industrial secrets, limiting the transfer of know-
how and opportunities for intellectual property theft. However, China may be poised to win access to technology from an
expanding range of commercial aviation joint ventures with these
companies. China's ability to develop engines for passenger aircraft
could have considerable potential for technology transfer to the
military, experts say. THE BOTTLENECK IN ENGINES Under AVIC's plan, fragmented engine research and development
would be consolidated to minimize competition and duplication of
effort. A legacy of Maoist-era dispersal of defence industries, engine research
institutes and aerospace manufacturing companies are scattered about
the country in cities including Shenyang, Xi'an, Shanghai, Chengdu and
Anshun. AVIC plans to inject its major engine related businesses into Xi'an Aero-
Engine as part of this consolidation, the listed company said in its 2011
annual report. "There is widespread consensus that engines have
become a bottleneck constraining the development of China's aviation
industry," the report said. China faces a daunting challenge. Only a handful of companies in the
United States, Europe and Russia have mastered this expertise. "Modern jet engine technology is like an industrial revolution in
power," said Andrei Chang, a Hong Kong-based analyst of the Chinese
military and editor of Kanwa Asian Defence Magazine. "Europe, the U.S.
and Russia have hundreds of years of combined experience, but China
has only been working on this for 30 years." Established manufacturers have laboured on research and
development since the 1950s to build safe and reliable engines with
thousands of components that function under extremes of
temperature and pressure. This involves state-of-the-art technologies
in design, machining, casting, composite materials, exotic alloys,
electronic performance monitoring and quality control. Since then, the big players have collected vast stores of performance
and operational data from existing engines that gives them a head
start in designing new versions with improved fuel efficiency and
reliability that airlines now demand. And, for commercial engines, all of
the design and manufacturing processes must be carefully coordinated
and exhaustively documented to satisfy aviation certification authorities. "The reason so few can do it is because it is really, really difficult," says
Richard Margolis, a former regional director of Rolls Royce in northeast
Asia. High performance military jet engines are crucial to Beijing's long term
plan to increase the number of frontline fighters and strike aircraft in
its air force and naval aviation units. These aircraft are a key element of
a long term military build-up aimed primarily at securing military
dominance over Taiwan and a vast swathe of disputed maritime
territory off China's east and southern coasts. Due to the export bans on military equipment to China, Beijing has
been forced to rely on imported fighters from Russia, reverse
engineered copies of these Russian aircraft, and some home-grown
designs. This strategy has delivered rapid results. Since 2000, China has
added more than 500 advanced fighters and strike aircraft with
capabilities thought to equal all but the most advanced U.S. stealth aircraft. At the same time, it has also sharply reduced the number of
obsolete aircraft based on Soviet-era designs, military experts say. MANUFACTURING PROCESS A clear example of this progress was on display recently when a
Chinese-made J-15 jet fighter practiced "touch and go" circuits on
China's first aircraft carrier, the newly commissioned Liaoning. These
manoeuvres suggest that J-15 pilots and crews will soon master take-
offs and landings from the carrier at sea. Foreign and Chinese military experts were quick to point out that the
J-15, one of China's newest military aircraft, was powered by a pair of
Russian Al-31 turbofans - they power almost all of China's frontline
aircraft. Reports in the Russian media say Moscow has sold more than
1,000 engines from the A1-31 family to China with further, substantial
orders in the pipeline. While Chinese engineers have been able to reverse-engineer Russian
airframes, the engines have been much more difficult to copy without
access to the complex manufacturing processes. AVIC subsidiary and
China's lead military jet engine maker, Shenyang Liming Aero-Engine
Group Corporation, has been working on a homegrown equivalent, the
WS-10 Taihang, but this power plant has so far failed to meet performance targets after testing on the J-15 and other fighters,
Chinese and Western military experts say. The Chinese military is expected to introduce another 1,000 advanced
fighters over the next two decades, according to Chinese defence
sector analysts. However, anger over reverse engineering and wariness of China's growing military power has made Moscow reluctant to
supply engines more advanced than the Al-31. Without imported or
locally built versions of these engines, China will be unable to build
aircraft that could compete with the latest U.S. or Russian stealth
fighters, experts say. While military jets are strategically important, the commercial market
is potentially much bigger. Boeing (BA.N) forecasts China will need an extra 5,260 large passenger aircraft by 2031. Bombardier Inc.
(BBDb.TO) projects demand for business jets will reach 2,400 aircraft over the same period. With each aircraft requiring at least two engines
plus spares, total demand could reach 16,000 engines with an
estimated average cost of $10 million each at current prices. China plans to compete for some of these aircraft orders with two
locally built passenger aircraft, the 90-seat ARJ21 regional jet and the
150-seat C919. GE (GE.N) will supply engines for the ARJ21. CFM International, a joint venture between GE and France's Snecma, won
the contract to develop new engines for the C919. Some of these
engines will be assembled at joint ventures in China. Despite the intensified research effort and potential for technology
transfer from these ventures, some experts say foreign engines will
continue to rule the skies in China. "This won't change for 10 or 15
years," says Chang from Kanwa Asian Defence Magazine. (Editing by Bill
Tarrant)

www.reuters.com/article/2012/10/30/uk-china-engine-idUSLNE89T00W20121030
 

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